{"product_id":"making-money-work-isbn-9781394257263","title":"Making Money Work","description":"\u003cp\u003e\u003cb\u003eThe Global Financial Crisis broke the monetary system. Here's how to fix it.\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003eIn \u003ci\u003eMaking Money Work: How to Rewrite the Rules of Our Financial System,\u003c\/i\u003e Matt Sekerke and Steve H. Hanke deliver a rigorous and fascinating exploration of the monetary economy. You'll find a detailed and clear roadmap of how and why fiat money is created and destroyed, its connections to the broader economy, and the objective mechanisms that underwrite and maintain its value.\u003c\/p\u003e \u003cp\u003eIn their exploration, Sekerke and Hanke solve many problems and puzzles and shed light on several important questions:\u003c\/p\u003e \u003cul\u003e \u003cli\u003eWhy economists misunderstand the structure and function of the monetary system\u003c\/li\u003e \u003cli\u003eThe central role of the commercial banking system in fiat money regimes, and why commercial banks are not like other financial intermediaries\u003c\/li\u003e \u003cli\u003eThe economic and regulatory constraints on bank money creation\u003c\/li\u003e \u003cli\u003eThe interplay between banking and capital markets in funding investment projects\u003c\/li\u003e \u003cli\u003eHow the “banks” that dominate the international financial landscape distort the lines between banking and capital markets business\u003c\/li\u003e \u003cli\u003eWhy banking regulation and fiscal policy determine and constrain monetary policy to an equal or greater extent than central bank actions\u003c\/li\u003e \u003c\/ul\u003e \u003cp\u003eSekerke and Hanke trace important post-crisis policy developments and sketch the broad strokes of a new operating model that would restore the performance of the monetary system and make better use of aggregate savings:\u003c\/p\u003e \u003cul\u003e \u003cli\u003eMaking neutrality the explicit goal of monetary policy, properly understood\u003c\/li\u003e \u003cli\u003eIncreasing the supply of bankable projects and keeping them on bank balance sheets\u003c\/li\u003e \u003cli\u003eBreaking the financial system's fatal attraction to land and real estate\u003c\/li\u003e \u003cli\u003eReducing regulatory distortions in lending markets\u003c\/li\u003e \u003cli\u003eReforming universal banking institutions and stimulating competition\u003c\/li\u003e \u003cli\u003eTransitioning to a quantity-based monetary policy framework\u003c\/li\u003e \u003c\/ul\u003e \u003cp\u003eAn engaging and incisive guide to the global systems of money and banking, \u003ci\u003eMaking Money Work\u003c\/i\u003e is destined to become a sought-after classic for bankers, finance professionals, policymakers, regulators, academics, and laypeople with an interest in money and banking.\u003c\/p\u003e \u003cp\u003eForeword xvii\u003c\/p\u003e \u003cp\u003eIntroduction xix\u003c\/p\u003e \u003cp\u003e\u003cb\u003ePart One: How Money Works: Institutions of the Monetary Economy 1\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003e\u003cb\u003eChapter 1: Rethinking Monetary Economics 3\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003eMacroeconomics Without Money 4\u003c\/p\u003e \u003cp\u003eBroad Money and the Banking System 5\u003c\/p\u003e \u003cp\u003eFrom Interest-rate Policy to Quantity-based Policy 7\u003c\/p\u003e \u003cp\u003eNeutral Monetary Policy 9\u003c\/p\u003e \u003cp\u003eProductive Capital Markets 9\u003c\/p\u003e \u003cp\u003e\u003cb\u003eChapter 2: Fiat Money Systems 13\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003eSpecifying Money So That Money Matters 14\u003c\/p\u003e \u003cp\u003eMoney Is Essentially an Abstract Measure of Value 14\u003c\/p\u003e \u003cp\u003eMoney Consists in a Claim or Credit 16\u003c\/p\u003e \u003cp\u003eThe State, or an Authority, Is an Essential Basis for Money 18\u003c\/p\u003e \u003cp\u003eMoney Is Not Neutral in the Economic Process 19\u003c\/p\u003e \u003cp\u003eFiat Monetary Standards 21\u003c\/p\u003e \u003cp\u003eMetallic Standards 21\u003c\/p\u003e \u003cp\u003eStandards After Metallic Standards 23\u003c\/p\u003e \u003cp\u003eForeign Exchange and the Quest for an International Monetary Standard 25\u003c\/p\u003e \u003cp\u003eRevisiting the Foundations of Monetary Economics 27\u003c\/p\u003e \u003cp\u003e\u003cb\u003eChapter 3: The Institutional Structure of the Monetary Economy 35\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003eThe Government Sector 36\u003c\/p\u003e \u003cp\u003eThe Fiscal Authority 36\u003c\/p\u003e \u003cp\u003eThe Monetary Authority 38\u003c\/p\u003e \u003cp\u003eThe Consolidated Government 39\u003c\/p\u003e \u003cp\u003eThe Commercial Banking System 41\u003c\/p\u003e \u003cp\u003eDeposit Creation by Individual Banks 43\u003c\/p\u003e \u003cp\u003eFallacious Accounts of Bank Funding and Deposit Creation 45\u003c\/p\u003e \u003cp\u003eFinancial Intermediaries 48\u003c\/p\u003e \u003cp\u003eAsset Managers 49\u003c\/p\u003e \u003cp\u003eMoney Market Funds 50\u003c\/p\u003e \u003cp\u003eAsset-backed Securities 51\u003c\/p\u003e \u003cp\u003eConsolidated Financial Intermediation Sector 53\u003c\/p\u003e \u003cp\u003eThe Nonbank Public: Nonfinancial Firms and Households 54\u003c\/p\u003e \u003cp\u003eNonfinancial Business 54\u003c\/p\u003e \u003cp\u003eHouseholds 56\u003c\/p\u003e \u003cp\u003eThe Rest of the World 57\u003c\/p\u003e \u003cp\u003eThe Money Supply and Its Connections to the Nonbank Public 58\u003c\/p\u003e \u003cp\u003eThe System of Claims as a Foundation for Monetary Theory 60\u003c\/p\u003e \u003cp\u003e\u003cb\u003eChapter 4: Financial Intermediation in the Capital Markets 67\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003eSavings and Investment: The Standard Macroeconomic Story 68\u003c\/p\u003e \u003cp\u003eSavings and Investment: The Microeconomic Foundations 70\u003c\/p\u003e \u003cp\u003eThe NPV Criterion 71\u003c\/p\u003e \u003cp\u003eInformation Asymmetry 72\u003c\/p\u003e \u003cp\u003eEquity Rationing 74\u003c\/p\u003e \u003cp\u003eRevising the Growth Model 75\u003c\/p\u003e \u003cp\u003eFinancial Intermediation and Project Stratification 75\u003c\/p\u003e \u003cp\u003e\u003cb\u003eChapter 5: Credit Creation by the Commercial Banking System 81\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003eSavings and Investment: Expanding the Standard Story 82\u003c\/p\u003e \u003cp\u003eThe Set of Bankable Projects 85\u003c\/p\u003e \u003cp\u003eMaturity Transformation and Bank Risk Management 88\u003c\/p\u003e \u003cp\u003eCredit Risk Management 89\u003c\/p\u003e \u003cp\u003eInterest Rate Risk Management 91\u003c\/p\u003e \u003cp\u003eLiquidity Risk Management 93\u003c\/p\u003e \u003cp\u003eEconomic Growth with Credit and Capital Markets 96\u003c\/p\u003e \u003cp\u003e\u003cb\u003eChapter 6: Universal Banks and the Banking–Capital Markets Boundary 103\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003eComplementarities and Competition in Banking and Capital Markets Business 106\u003c\/p\u003e \u003cp\u003eRisk Transformation in Securitization Markets 108\u003c\/p\u003e \u003cp\u003eRisk Transfer Contracts 111\u003c\/p\u003e \u003cp\u003eBank Lending to Nonbank Financial Institutions 114\u003c\/p\u003e \u003cp\u003eRisk Management in Universal Banks 116\u003c\/p\u003e \u003cp\u003e\u003cb\u003ePart Two: A Broader View of Monetary Policy 121\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003e\u003cb\u003eChapter 7: Analytical Frameworks and Basic Monetary Facts 129\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003eThe Equation of Exchange and the Demand for Money 130\u003c\/p\u003e \u003cp\u003eThe Cambridge Equation 132\u003c\/p\u003e \u003cp\u003eThe Equation of Exchange in Economic Theory 132\u003c\/p\u003e \u003cp\u003eDivisia Broad Money 135\u003c\/p\u003e \u003cp\u003eConstructing Divisia Indices 136\u003c\/p\u003e \u003cp\u003eComparing Divisia and Simple Sum Aggregates 138\u003c\/p\u003e \u003cp\u003eSources of Divisia Money 141\u003c\/p\u003e \u003cp\u003eDivisia Money by Sectors and Strata 144\u003c\/p\u003e \u003cp\u003eEvolution of Bank Balance Sheets from 1945 to 2023 149\u003c\/p\u003e \u003cp\u003eBroad Trends 150\u003c\/p\u003e \u003cp\u003eFiner Details 153\u003c\/p\u003e \u003cp\u003eBank Lending Versus Capital Market Finance 156\u003c\/p\u003e \u003cp\u003eThree Big Questions 163\u003c\/p\u003e \u003cp\u003e\u003cb\u003eChapter 8: The Regulation of Universal Banks 173\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003eBank Capital Regulation 176\u003c\/p\u003e \u003cp\u003eDefining Bank Capital 177\u003c\/p\u003e \u003cp\u003eCapital Adequacy Before the Basel Era 179\u003c\/p\u003e \u003cp\u003eCapital Adequacy After the First Basel Accord 180\u003c\/p\u003e \u003cp\u003eThe 1996 Market Risk Amendment 182\u003c\/p\u003e \u003cp\u003eThe Monetary Policy Impact of the Basel I Era 183\u003c\/p\u003e \u003cp\u003eThe Problem of the Trading Book 184\u003c\/p\u003e \u003cp\u003eRegulatory Capital Under Basel III 187\u003c\/p\u003e \u003cp\u003eBank Liquidity Regulation 189\u003c\/p\u003e \u003cp\u003eThe Liquidity Coverage Ratio 190\u003c\/p\u003e \u003cp\u003eThe Net Stable Funding Ratio 194\u003c\/p\u003e \u003cp\u003eSumming Up 195\u003c\/p\u003e \u003cp\u003e\u003cb\u003eChapter 9: Monetary Aspects of the Government Budget 203\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003eStable Government Debt Dynamics and the Monetary Standard 205\u003c\/p\u003e \u003cp\u003eStability Conditions 205\u003c\/p\u003e \u003cp\u003eDeposit Insurance 208\u003c\/p\u003e \u003cp\u003eFiscal Influences on Aggregate Conditions 209\u003c\/p\u003e \u003cp\u003eCentral Bank Transactions in Government Obligations 210\u003c\/p\u003e \u003cp\u003eGovernment-sponsored Enterprises and Financial Agencies 211\u003c\/p\u003e \u003cp\u003eMonetary Consequences of GSE Guarantees 213\u003c\/p\u003e \u003cp\u003eThe Federal Home Loan Bank System 214\u003c\/p\u003e \u003cp\u003eCrowding-out in Capital Markets 216\u003c\/p\u003e \u003cp\u003eThe Disaggregated Budget Arithmetic 217\u003c\/p\u003e \u003cp\u003eSome Examples of Sector-level Fiscal Influence 219\u003c\/p\u003e \u003cp\u003eSectoral Impact of the Fiscal Impulse from Quantitative Easing 220\u003c\/p\u003e \u003cp\u003eAppendix 9.A Propagation of a Fiscal Impulse 223\u003c\/p\u003e \u003cp\u003e\u003cb\u003eChapter 10: Central Bank Policy 231\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003eCentral Bank Policy Implementation Before and After the GFC 233\u003c\/p\u003e \u003cp\u003eQuantitative Easing and Its Consequences 234\u003c\/p\u003e \u003cp\u003eReestablishing Control Over Short-term Interest Rates 237\u003c\/p\u003e \u003cp\u003eThe Path to Normalization and the COVID Interventions 238\u003c\/p\u003e \u003cp\u003eStructural Changes in the Reserve Market 242\u003c\/p\u003e \u003cp\u003eInterest Rate Policy Transmission and Asset Prices 245\u003c\/p\u003e \u003cp\u003eAn Unintended Period of Steady Broad Money Growth 247\u003c\/p\u003e \u003cp\u003eProspects for Future Interest Rate Policy 251\u003c\/p\u003e \u003cp\u003e\u003cb\u003ePart Three: Rewriting the Rules of Our Financial System 259\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003e\u003cb\u003eChapter 11: Defining Neutral Monetary Policy 261\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003eNeutral Monetary Policy 262\u003c\/p\u003e \u003cp\u003eDefining Neutrality 264\u003c\/p\u003e \u003cp\u003eWhy Neutrality? 266\u003c\/p\u003e \u003cp\u003eEfficient Use of Global Savings 267\u003c\/p\u003e \u003cp\u003eFormation of Investable Projects 268\u003c\/p\u003e \u003cp\u003eFormation of Bankable Projects 269\u003c\/p\u003e \u003cp\u003e\u003cb\u003eChapter 12: Universal Banks in the Monetary System 271\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003eCompetition in Commercial Banking 273\u003c\/p\u003e \u003cp\u003eCompetition in Capital Markets 276\u003c\/p\u003e \u003cp\u003eCompetition Within Universal Banks 277\u003c\/p\u003e \u003cp\u003eCompetition Versus Financial Stability 278\u003c\/p\u003e \u003cp\u003eGovernance 279\u003c\/p\u003e \u003cp\u003eRegulation 281\u003c\/p\u003e \u003cp\u003e\u003cb\u003eChapter 13: The Base of Investable and Bankable Projects 285\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003eOf Savings Gluts and Safe Assets 286\u003c\/p\u003e \u003cp\u003eShifts in the Balance of Domestic Saving 287\u003c\/p\u003e \u003cp\u003eSafe Assets as a Sink for the Saving Glut 288\u003c\/p\u003e \u003cp\u003eAprès le deluge 289\u003c\/p\u003e \u003cp\u003eThe Pathological Character of Land and Real Estate 290\u003c\/p\u003e \u003cp\u003eInvestable Projects Involving Land 290\u003c\/p\u003e \u003cp\u003eThe Bankability of Investable Projects Involving Land 292\u003c\/p\u003e \u003cp\u003eExposure of the Banking System to Land Values 294\u003c\/p\u003e \u003cp\u003eIs Technology Making Fewer Projects Bankable? 296\u003c\/p\u003e \u003cp\u003eHow to Expand the Base 297\u003c\/p\u003e \u003cp\u003e\u003cb\u003eChapter 14: Rewriting the Rules 303\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003eToward a New Central Bank Operating Model 304\u003c\/p\u003e \u003cp\u003eErrors of the Old Monetarism 305\u003c\/p\u003e \u003cp\u003eTargeting Divisia Money 306\u003c\/p\u003e \u003cp\u003eReserve Management 309\u003c\/p\u003e \u003cp\u003eStanding Facilities 309\u003c\/p\u003e \u003cp\u003eMonitoring the Distributional Impact of Broad Money Growth 311\u003c\/p\u003e \u003cp\u003eFixing Bank Regulation 311\u003c\/p\u003e \u003cp\u003eSplitting the Banking Book and the Trading Book 312\u003c\/p\u003e \u003cp\u003eNeutral Credit Risk Weights 314\u003c\/p\u003e \u003cp\u003eLiquidity Risk Management 318\u003c\/p\u003e \u003cp\u003eUnderwriting, Pricing, and Innovation 318\u003c\/p\u003e \u003cp\u003eUsing Savings More Efficiently 320\u003c\/p\u003e \u003cp\u003eReducing Government’s Footprint in the Capital Markets 320\u003c\/p\u003e \u003cp\u003eUnwinding the Federal Reserve Balance Sheet 322\u003c\/p\u003e \u003cp\u003eUnfinished Business 324\u003c\/p\u003e \u003cp\u003eAppendix 14.A Neutral Credit Risk Weights 326\u003c\/p\u003e \u003cp\u003eAbout the Authors 331\u003c\/p\u003e \u003cp\u003eIndex 333\u003c\/p\u003e  \u003cp\u003e\u003cb\u003eMATT SEKERKE\u003c\/b\u003e is a Managing Director at SEDA Experts, Senior Macro Advisor at Hiddenite Capital Partners, a Fellow at the Institute for Applied Economics, Global Health, and the Study of Business Enterprise at the Johns Hopkins University, and a Visiting Fellow in the Department of Finance at Durham University Business School. He is the author of \u003ci\u003eBayesian Risk Management\u003c\/i\u003e (Wiley Finance, 2015). \u003c\/p\u003e\u003cp\u003e\u003cb\u003eSTEVE H. HANKE\u003c\/b\u003e is a Professor of Applied Economics and Founder and Co-Director of the Institute for Applied Economics, Global Health, and the Study of Business Enterprise at the Johns Hopkins University. Hanke has served as an advisor to governments and heads of state in Europe, South America, and Asia. Currently, he serves as Chairman of the Supervisory Board of AMG Critical Materials in Amsterdam. He is the co-author of \u003ci\u003eCapital, Interest, and Waiting \u003c\/i\u003e(Palgrave Macmillan, 2024) with Leland B. Yeager.   \u003c\/p\u003e\u003cp\u003eIn \u003ci\u003eMaking Money Work: How to Rewrite the Rules of Our Financial System,\u003c\/i\u003e Matt Sekerke and Steve H. Hanke deliver a rigorous and fascinating exploration of the monetary economy. You’ll find a detailed and insightful roadmap of how and why fiat money is created and destroyed, its connections to the broader economy, and the objective mechanisms that underwrite and maintain its value. \u003c\/p\u003e\u003cp\u003eIn their exploration, Sekerke and Hanke solve many problems and puzzles about the structure and function of the monetary system, the economic importance of commercial banking and capital markets, and the role of banking regulation and the government budget in monetary policy. \u003c\/p\u003e\u003cp\u003eSekerke and Hanke trace important post-crisis policy developments and sketch a new operating model that would restore the performance of the monetary system, ensure the economic neutrality of monetary conditions, and make better use of aggregate savings. The authors propose reforms to the structure and regulation of the commercial banking system, a reduction of the government’s footprint in capital markets, and mechanisms to create accountability for the monetary impact of fiscal policy. A quantity-based central bank policy anchored by disaggregated money supply data is the centerpiece of their policy proposals. \u003c\/p\u003e\u003cp\u003eAn engaging and incisive guide to the global systems of money and banking, \u003ci\u003eMaking Money Work\u003c\/i\u003e is destined to become a sought-after classic for bankers, finance professionals, policymakers, regulators, academics, and laypeople with an interest in money and banking.   \u003c\/p\u003e\u003cp\u003e\u003cb\u003ePraise for MAKING MONEY WORK\u003c\/b\u003e \u003c\/p\u003e\u003cp\u003e“What is worth praising in this properly extraordinary book is the combination of monetary theory and the business-related imperative of making money. I have never seen (except perhaps in reading Keynes) such a skillful association.”\u003cbr\u003e \u003cb\u003e—From the Foreword by JACQUES DE LAROSIÈRE,\u003c\/b\u003e former Managing Director of the International Monetary Fund (1978-1987) and former Governor of the Banque de France (1987-1993) \u003c\/p\u003e\u003cp\u003e“This book provides a timely, comprehensive, and integrated analysis of monetary policy. It addresses a range of issues, including bank regulation, cryptocurrencies, and fiscal policy. It is a valuable source for people who want to have a more professional, objective and in-depth understanding of these important issues.”\u003cbr\u003e \u003cb\u003e—DAVID M. WALKER,\u003c\/b\u003e former Comptroller General of the United States \u003c\/p\u003e\u003cp\u003e“Sekerke and Hanke offer a fine corrective to economists’ conventional wisdom on monetary policy and the role of the banking system. As well as demonstrating how standard models of economic growth fail to capture the importance of banking and finance, they have important recommendations on the reform of bank regulations and central banks’ thinking about money.”\u003cbr\u003e \u003cb\u003e—JOHN PLENDER,\u003c\/b\u003e Senior Editorial Columnist, \u003ci\u003eFinancial Times\u003c\/i\u003e \u003c\/p\u003e\u003cp\u003e“This is a remarkable and important contribution to economic theory and practice. The authors give a clear explanation of money creation and its macroeconomic impact. More importantly, the book gives the reader a deep understanding of how official monetary policies impact investment financing, income distribution and economic growth in general. It’s a big winner.”\u003cbr\u003e \u003cb\u003e—MARK MOBIUS,\u003c\/b\u003e Chairman, Mobius Investments \u003c\/p\u003e\u003cp\u003e“Sound reasoning, clear writing, informed judgments and unconventional conclusions, all informed by a keen historical awareness—it’s not impossible that Messrs. Sekerke and Hanke will be drummed out of the corps of economists for this marvelous grand tour of all things monetary.”\u003cbr\u003e \u003cb\u003e—JAMES GRANT,\u003c\/b\u003e Editor, \u003ci\u003eGrant’s Interest Rate Observer\u003c\/i\u003e\u003c\/p\u003e","brand":"Wiley","offers":[{"title":"Default Title","offer_id":47989556084965,"sku":"NP9781394257263","price":34.95,"currency_code":"USD","in_stock":false}],"thumbnail_url":"\/\/cdn.shopify.com\/s\/files\/1\/1842\/7735\/files\/9781394257263.jpg?v=1761784581","url":"https:\/\/k12savings.com\/products\/making-money-work-isbn-9781394257263","provider":"K12savings","version":"1.0","type":"link"}